Life Planning 101

Julie Min Chayet, JD, Class of 1991 is Managing Director, Market Trust Executive at U.S. Trust and can be reached at julie.m.chayet@ustrust.com

By Julie Min Chayet '91

Growing up as the child of psychiatrists, I have counseled people in need as second nature. Haverford reinforced this drive by instilling in me a responsibility to be a contributing member of society. Influenced by the deep sense of community grounded in Quaker values, I've built my career as a trust and estates attorney on my Haverford experience. As a trusted advisor, I help individuals and families protect their wealth using multigenerational planning techniques that rely on the principles of the duty of care and the duty of loyalty.

Clients often come to me after experiencing a major life event. I ask them about their priorities and goals, and their answers typically vary depending on what stage of life they're in at the time. The illustration on the next page ("Your Roadmap to Charitable Planning") is a guide to how life's milestones can influence your most important decisions. Here are some of the stops you can expect as you drive through this mini course in Life Planning 101:

Stage I spans your 20s through your 40s. You are influenced most by friends and family, focused on your own needs and defining your identity. Your priorities change as you finish graduate school, start a family, buy a home and become financially independent.

Stage II begins in your 50s and runs through your 60s. As you reflect on your academic and career highlights, you start thinking about retirement. Questions abound: How much money is really enough? When will I be ready to stop working? What are the best ways to establish a charitable legacy while protecting my family financially?

Stage III covers your 70s, 80s, 90s and beyond. Early in this stage you need to ensure that the estate plan you created ten or more years earlier remains viable for accomplishing your goals. It may be time to look for ways to preserve wealth while enjoying the fruits of your labor.

If you have planned properly, your later years will be rewarding. Your needs become simpler, and you have the security of knowing that you have taken care of the people and places you love.

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The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.

A charitable bequest is one or two sentences in your will or living trust that leave to Haverford College a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.

an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

"I give to Haverford College, a nonprofit corporation currently located at 370 Lancaster Avenue, Haverford, PA 19041, or its successor thereto, ______________* [written amount or percentage of the estate or description of property] for its unrestricted use and purpose."

able to be changed or cancelled

A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.

cannot be changed or cancelled

tax on gifts generally paid by the person making the gift rather than the recipient

the original value of an asset, such as stock, before its appreciation or depreciation

the growth in value of an asset like stock or real estate since the original purchase

the price a willing buyer and willing seller can agree on

The person receiving the gift annuity payments.

the part of an estate left after debts, taxes and specific bequests have been paid

a written and properly witnessed legal change to a will

the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will

A donor advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to Haverford or other charities. You cannot direct the gifts.

An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.

Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.

Securities, real estate or any other property having a fair market value greater than its original purchase price.

A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.

You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the potential tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.

You fund this type of trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to Haverford as a lump sum.

You fund this trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to Haverford as a lump sum.

A beneficiary designation clearly identifies how specific assets will be distributed after your death.

A charitable gift annuity involves a simple contract between you and Haverford where you agree to make a gift to Haverford and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.

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